What does a government that recently announced its biggest budget surplus in years do? In Hong Kong’s case, the answer is to unveil a blueprint for a new sales tax, says the Wall Street Journal.
Hong Kong’s prosperity since World War II is sometimes referred to as a “miracle.” But much of the country’s success is built on its low and simple tax regime:
The government says it needs to broaden the tax base because it is heavily dependent on revenue from the city’s volatile property market. But according to the Journal, a system that has just delivered a HK$14 billion ($1.8 billion) surplus for 2005-06 is in no need of fixing. Instead of talking about new taxes, Hong Kong could be returning this surplus to its citizens. And if it’s worried about running short the next time the local property market takes a nose dive, a better option would be to take a hard look at soaring spending. The city now spends HK$33.8 billion a year on social welfare, almost double the figure a decade ago.
Source: Editorial, Tax-and-Spend Hong Kong, Wall Street Journal, July 19, 2006.
For text (subscription required): http://online.wsj.com/article/SB115325719288410249.html
For more on Taxes: http://www.ncpa.org/sub/dpd/?Article_Category=20
FMF Policy Bulletin/ 25 July 2006
